It was The Hobbit story, but not the one we know today. It involved Bilbo finding the Ring, but there were no Dwarves. Instead there was Niniel, who was a ghost, and she appeared in the story every so often. And instead of turning the wearer invisible, the Ring allowed one to travel in time.

Bilbo decided to go into the future, and ended up in the Scouring of the Shire. The last I remember of the dream, is me watching the film in tears, thinking it was amazing ...